Index Archive

21 February 2013

CAG Draft Report on Delhi airport Metro link DAMPEL Undue favors losses to Indian CitizensCAG has said in a draft report said that Metro rail project under the public-private partnership (PPP) model - Delhi Airport Metro Express Line (DAMPEL) - has been riddled with concessions to DAMPEL, the joint venture between Reliance Infrastructure and Construccionesy Auxiliar de Ferrocarriles, SA (CAF) of Spain,

According to the CAG report, Centre had mandated that all infrastructure projects on PPP mode costing over Rs 100 crore would have to be appraised by the PPP Appraisal Committee (PPPAC), this project was not routed through the committee despite an estimated cost of over Rs 3,000 crore.

PPP route was chosen for the project on the grounds that this would enable it to be completed before the Commonwealth Games in 2010; the line actually became operational up to the Indira Gandhi International Airport (IGIA) five months after the Games.

The CAG has revealed that DAMEPL got customs duty concessions on imports of capital goods worth Rs 990 crore on the basis of a recommendation letter from DMRC.

According to CAG, this waiver should not have been extended to DAMEPL and was applicable only if the items were imported for DMRC itself and would ultimately be owned by it.This undue benefit, CAG estimates, amounted to Rs 29.56 crore.

The report also mentions about investment of funds from an escrow account for the project to various Reliance ADAG group mutual funds without proper disclosure.

CAG report says that the concessionaire released Rs 285.43 crore from the escrow account to "various subsidiaries of M/s Reliance Infra Limited" and DAMEPL had not given any disclosure about any of these transactions being with a "related party".

The report says that the company should have been penalized for the non-completion of two of its proposed stations - Dhaula Kuan and Aero City, before the scheduled deadline.

According to the agreement, the company had to finish the undertaken project within 90 days of the provisional completion certificate. For this also, the company has not been asked to pay penalty, which would amount to Rs 1.66 crore. Delhi Metro has, on the other hand, incurred losses of Rs 2.25 crore due to the unfinished project.

Government broke its own rules and guidelines.

CAG has found that the project was approved with DAMEPL having to contribute only 46.17% of the project cost through its equity and debt and the government funding the rest.

This despite the fact that norms set by the finance ministry allowed only 40% government assistance to make a project viable.

The report goes on to point out that while the Union urban development ministry had approved a debt -equity ratio of 7:3 for the concessionaire, between 2009 and 2012 the ratio was 4,3218:1, 230,907:1 and 275,205:1 for the three financial years. Strangely, when this was pointed out, DMRC argued that it was for the senior lender to monitor these details, according to CAG.

Majority Indian Laws got the loopholes so one can get all the undue benefits legally.

Hope one day Supreme Court of India will start to declare such loopholes and benefits enjoyed by companies illegal and declare it should be made crime under prevention of corruption act.

For subsidies petrol and LPG Government says it has no money.

Then why rich companies are given undue benefits using legal loopholes?